Question

Dinesh Garments purchased a machine for Rs. 50,000 and spent Rs. 6,000 on its creation. On the date of purchase it was estimated that the effective life of the machine will be ten years and after ten years its scrap value will be Rs. 6,000. The amount of depreciation for each year on straight line basis is :

• A. Rs. 5,000
• B. Rs. 5,600
• C. Rs. 6,000
• D. None of the above.

Answer 1

Answer: (A)

Rs. 5,000

Depreciation = (Cost - Residual value)/Useful life Depreciation $=56000-6000/10=5000$